1031 Exchange
Part 1
My parents owned a rental in Annapolis, MD for the past 27 years. It was my mom's "first" house when she moved to the area. They flipped it once, 13 years ago.
Recently it became a headache. The area changed because a lot of condo's and A class apartments moved in. While the house was still had appreciation value, the rental class and value was not there any more. Plus my mother went from a stay-at home mom to working full time so her availability was not like it use to be.
They decided to sell it and I am reinvesting the funds/managing the house for the.
Sold House
2 Bed, 2 Bath 1300 sqft 35 years old
Sold Price 235,000
Rent - $1495
Pulled out $135,000 used it to put 20% down on each house
Plan- To Purchase 3 Houses Hanford, CA These are class A markets. Tenants are professionals who want personal property as a rentals because they will not stay longer than military, DOD or federal prisons requirements.
2 Houses Currently Under Contract (Brand New) Best School District Gated community. They have granite, tile downstairs, fenced in backyards, black appliances,....
$202,199 4 bed 2.5 Bath 1575sqft Rented $1600 Hoa $106
$212,000 4 bed 3 bath 1790 sqft HOA $106
3rd House - Still working on it will not be older than 10 years
Lessons Learned- If an investment s not doing as well MOVE the MONEY!!!! By diversifying we went from a 35 year old house that needed new everything too a Brand New or 10 years old that bring in more than the previous house PAID OFF would have.
The houses will make a total of approx. $1500 after mortgage, tax and insurance expenses. This is more than the first house would have made paid off!!!! Other expenses should be low to non existent because the new houses are under warranty.
So to everyone who asks what should they do with the equity. Evaluate the options, sometimes you have to move markets. My parents moved the money from Maryland to California. In this case it makes sense.